Sun State Savings

After two months of surg­ing sales, home resales fell by 100,000 units last month to 4.4 mil­lion homes nationwide.

October’s Exist­ing Home Sales tally is slightly below the report’s 6-month rolling aver­age, accord­ing to the National Asso­ci­a­tion of REALTORS® — a time span which includes this year’s $8,000 fed­eral home buyer tax credit’s tail end.

Hous­ing sta­tis­tics have been wildly incon­sis­tent dur­ing that period.

For the future of hous­ing mar­kets, though, it’s encour­ag­ing that first-time and invest­ment prop­erty buy­ers were both out­num­bered by “move-up” buy­ers; buy­ers that have sold their respec­tive homes in favor of larger ones. It’s the move-up buy­ers that power housing.

In Octo­ber, buyer pro­files broke down as follows:

• First-time buy­ers : 32 per­cent of all buy­ers, unchanged from September
• Repeat home buy­ers : 49 per­cent of all buy­ers, down one tick from September
• Investors : 19 per­cent of all buy­ers, up one tick from September

As a point of com­par­i­son, first-timers rep­re­sented 50 per­cent of all pur­chases in Octo­ber 2009.

For home buy­ers, October’s Exist­ing Home Sales report is nei­ther weak nor strong. It sig­nals that, with mort­gage rates low and home afford­abil­ity high, hous­ing may be reach­ing some form of bal­ance. Because — although home sales are down — home sup­plies are down, too.

We can infer that buy­ers out­num­ber sell­ers, but prob­a­bly not by much. In most areas, nego­ti­a­tion lever­age is still up for grabs.

At the cur­rent pace of sales, the com­plete hous­ing stock would be depleted in 10.6 months.

Exist­ing home sales jumped 10 per­cent in Sep­tem­ber, the biggest monthly jump on record and a sig­nal that the hous­ing mar­ket may be return­ing to a nor­mal sales pat­tern post-$8,000 fed­eral tax credit.

Exist­ing Home Sales counts home resales (i.e. not new con­struc­tion) and 80 per­cent of home resales close within 45–60 days. It’s no sur­prise, there­fore, September’s data is strong.

Through­out the July and August, mort­gage rates were in free-fall, push­ing home afford­abil­ity to near-record lev­els. Con­cur­rently, the num­ber of homes avail­able for sale climbed to multi-year highs.

“Deals” were in ample sup­ply this sum­mer and eager home buy­ers snatched them up.

Some of these deals included “dis­tressed prop­er­ties”, a cat­e­go­riza­tion that includes homes in var­i­ous stages of fore­clo­sure or short sale, accounted for 35 per­cent of all sales, an uptick of 1 per­cent from August.

Accord­ing to the National Asso­ci­a­tion of Real­tors®, home resales split as follows:

• First-time buy­ers : 32 per­cent of all buyers
• Repeat home buy­ers : 50 per­cent of all buyers
• Investors : 18 per­cent of all buyers

By con­trast, in Novem­ber 2009, first-timers accounted for more than half of all resales.

For home buy­ers, September’s Exist­ing Home Sales report fore­shad­ows a more com­pet­i­tive hous­ing mar­ket through the New Year. In addi­tion to ris­ing sales vol­ume, home sup­plies are down by nearly 2 months from July.

At the cur­rent pace of sales, the com­plete hous­ing stock would be depleted in 10.7 months.